New Doc’s Office ​“Facility” Fees Spark Outrage

On a recent visit to his doctor, Johnny Dye paid his insurance co-pay, then got a surprise in the mail: A bill for an extra $30, for a vague new ​“facility fee.”

Yale-New Haven Hospital (YNHH) had purchased Dye’s doctor’s practice, resulting in an extra charge tacked on to every patient visit.

Thanks to a law just passed by the state legislature, people like Dye, who lives on Arthur Street in the Hill, might not be surprised by facility fees in the future.

But they’ll still have to pay them — for now.

Another recently passed bill charges the state comptroller with studying facility fees, which may set the stage for legislation to limit or eliminate them.

The new fee has emerged as a public issue this spring. Upon discovering the unexpected charge in bills mailed to their homes, Dye and his neighbors have raised complaints about the fee for three straight months at meetings of the Hill South management Team. One month the neighbors questioned a hospital official about it. At the most recent meeting, this past week, they raised it again with their state representation, Juan Candelaria, who promised legislators would tackle the issue in the next session. Yale University unions have taken on the topic, warning that hospital takeovers can mean increasing bills and decreasing patient choice.

Meanwhile, up the Shoreline, Ted Kennedy Jr. (pictured) made a point of singling out and criticizing the fees when in a speech last week as he accepted the Democratic nomination for state senator. He drew cheers when he said, ​“I don’t think it is right for patients to have to pay three times more in their doctor’s offices than they did the year before for the same exact services only because the hospital recently acquired the practice and now there is a new sign on the door and a new rate.”

Johnny Dye said senior citizens like him shouldn’t have to pay a ​“bill on top of the bill,” that it can be too much for people with limited incomes to bear.

Vin Petrini, YNHH senior vice-president of public affairs, said that facility fees are an unavoidable part of Medicare regulations and that they make sense because hospital-owned practices can provide better and more efficient care.

The debate over facility fees is just one part of a larger discussion about the effects of hospitals expanding their reach, buying up private medical practices.

In 2012, YNHH bought out the Hospital of St. Raphael, becoming the one of the country’s largest hospitals. Recently, YNHH, a not-for-profit, moved to join forces with a large hospital management company that’s looking to buy four hospitals in Connecticut and convert them to for-profit institutions. YNHH has also been acquiring doctors’ offices and private practices.

“Whacked Like Hell”

Facility fees help hospitals pay for the extra expense of providing 24-hour emergency care. They are a normal part of billing for hospital visits. But in the new health care landscape, in which hospitals are buying up private medical practices, patients can incur facility fees even when they don’t go to the hospital, if they visit hospital-owned medical practices.

That’s what happened to Dye, who described himself as ​“over 70.” He said he got a facility fee bill after a visit to a medical specialist.

“I’ve got five or six specialists I go to,” he said. He visits some every four months, some every six. A $30 fee for each of those visits will add up, he said. ​“When you get to be a senior citizen, that’s a grocery bill right there.”

Dye said he can afford it, but lots of older folks can’t. ​“That’s a bill on top of the bill.”

Dye said he could probably find a different specialist outside of the YNHH system, to avoid the co-pay. But he doesn’t want to go out and shop for a new doctor. ​“These guys have been taking care of me for 15 to 20 years.”

“Senior citizens get whacked like hell,” Dye said. ​“A lot of them are having trouble with just paying for their medicine.”

As fees add up, people may have to choose between paying medical bills and paying for things like heating oil, Dye said. (he declined to be photographed for this article.)

“It’s hitting people hard, because people don’t have any money for this,” said Angela Hatley, the communications director for the Hill South management team. She said other Hill neighbors have joined Dye in raising concerns about the fees.

“Robust Assistance”

At April’s community management team, YNHH’s Petrini came to explain facility fees.

“In essence what a facility fee does is it covers the 24 – 7 operating costs of a hospital,” Petrini (pictured) said in an interview with the Independent. The fees help cover the cost of services like a round-the-clock emergency room, with people ready to handle any trauma.

“It’s a byproduct of the broader services that the hospital offers,” Petrini said.

Even though Dye didn’t visit the hospital and didn’t use emergency services, he was still charged a facility fee because his doctor’s practice is now owned by the hospital.

“Those fees are part and parcel of the hospital bill,” Petrini said. ​“We have to uniformly charge across all different providers that are hospital-based.”

“Hospital-based” means owned by the hospital, even if a practice isn’t located at the hospital.

Petrini said the hospital is aware that facility fees can be a hardship for some people. ​“We have a very robust assistance program,” he said.

Patients can qualify for free care if they’re earn below 250 percent of the federal poverty level. If they earn between 250 and 400 percent, they can qualify for discounted care.

“We’re working on updating our financial assistance policies to try to address these issues,” Petrini said.

“Eat Those Fees”

Starting Oct. 1, health care providers will be required to notify patients of facility fees, in advance of medical appointments. That change is due to the passage of House Bill 5337.

Petrini said YNHH worked with the state attorney general on drafting the bill. He said the hospital has been notifying people of facility fees with ​“signage” but hasn’t been mailing out notices. ​“Now we’re going to make a much better effort,” he said.

“This is an enhancement in transparency in health care costs,” said New Haven state Sen. Martin Looney. Now patients will know in advance what they will be billed for ​“rather than be blindsided by it afterwards.”

Advance notice is fine, but facility fees should be prevented entirely, Hatley said. ​“We want them to eat those fees.”

Part of the problem, said Jay Sokolow, a radiologist who headsthe New Haven County Medical Association, is that hospitals have not traditionally been in the business of running private medical practices. The billing structure as it exists is not set up to reflect the difference between a hospital visit and a visit to a doctor’s office owned by a hospital.

“This kind of highlights where regulation is way behind,” Sokolow said. ​“It’s a model that we haven’t really looked at what the ramifications are.”

So, how about doing away entirely with facility fees?

“We could very well wind up doing that next year,” said Sen. Looney. This year, the attorney general’s proposals didn’t call for that.

Facility fees make sense for hospital treatment, Looney said. ​“But hospitals are not gobbling up community-based facilities and making them satellites.” Facility fees make less sense in that context.

“We may decide they are an unfair surcharge,” Looney said. The comptroller’s study will look into that question, to assess the ​“appropriateness and reasonableness” of facility fees.”

“It’s something that we will be looking at closely,” Looney said. ​“The legislation we passed may turn out to be just the first step.”

Petrini said facility fees are reasonable in hospital-owned medical practices because the hospital holds offices to high standards and protocols, leading to better care.

Looney said that’s a difficult argument to make when a patient receives the same care from the same doctor and only the ownership has changed. The comptroller’s study will look at the matter closer, to see if the state should move to limit or eliminate facility fees, Looney said.

“It’s a worthy debate,” Petrini said, on the matter of eliminating facility fees. ​“Certainly in the context of all that’s happening in health care right now, it’s worth having.”

But the debate should be placed in the larger context of how care is provided and paid for, he said. With ​“the vast majority of patients paid for through government payers” and Medicare and Medicaid seeing big cuts, ​“there has to be some opportunity for providers to work collectively.”

New Haven state Rep. Pat Dillon also called for a broader discussion.

“Hospitals were charging the fees because they could, so it’s important that we took steps to protect consumers,” said Dillon. ​“But we should all be accountable. It’s simplistic to single out hospitals but leave out government’s role and insurers as bad actors. We expect emergency rooms to be open 24/7 and take everyone whether they have insurance or not. This year activists and legislators were all over the map, first taxing hospitals and then cracking down on facility fees, but they let other parts of the system off the hook.”